Positron Emission Tomography (PET) is an in vivo analog of autoradiography, which makes it a potentially powerful new tool for imaging biological processes and molecular targets in small laboratory animals. Its fundamental advantage is that functional data can be obtained non-invasively, allowing each animal to be studied repeatedly. Thus, each animal can serve as its own control in studies with a longitudinal design. There is significant interest in small animal PET within the pharmaceutical and biotechnology industry because in vivo quantification of biological processes to measure an agent'smechanism of action and its concentration at the site of action are of great importance in drug development. While the advantages of small animal imaging with PET are obvious, the challenges are also very significant. The main barriers to using PET in studies of laboratory animals have traditionally been poor spatial resolution, low sensitivity, and high cost. To address these deficiencies, we propose to develop a detector that can achieve extremely fine spatial resolution and high sensitivity in a cost-effective manner. The detector will be based on finely pixelated monolithic block of scintillator coupled to a position sensitive detector. Phase II efforts will focus on the development of a proof-of-concept benchtop small-animal PET system, consisting of a small number of complete detector modules.